Beverage excise should be fair, Ichitan boss says

An excise tax on ready-to-drink beverages should be equalised to keep competition fair, says a top player in this industry.

Tan Passakornnatee, chairman of Ichitan Group, urged fair practice in the collection of excise tax on the ready-to-drink segment, especially on 111 products that have received tax exemptions.

He said that if tax collection was not carried out fairly and targeted particular manufacturers, it would lead to unfair competition in the marketplace.

All businesses in the beverage industry, including green tea, have invested for the long term. They need time to analyse market opportunities and trends.

“If the government wants to collect excise tax on ready-to-drink beverages, it should increase the tax rate gradually from a small base so manufacturers can adjust.

A tax rate of 10-20 per cent is too high,” he said.

Tan said the shock of a sudden tax hit would have a negative impact on operating costs and retail prices.

He said the overall market for ready-to-drink green tea was worth about Bt16 billion last year and had been anticipated to increase by 10 per cent this year. However, it declined by 2 per cent year on year in the first six months on negative economic and political factors including lower spending power of consumers.

A source from the fruit-juice industry said that if the government collects excise tax on beverages containing sugar, it should not cover only beverages.

There are many other consumer products such as foods and snacks that have sugar as a major ingredient.

The excise should be imposed throughout the segment.

Padermpop Songkoh, managing director of Kasikorn Securities, said a tax on ready-to-drink beverages based on sugar content would have a short-term impact on the industry as well as the share prices of listed beverage firms.

He said the real pressure should come from consumer purchasing power, which has not yet fully recovered.